By Ahmed Zuhoor
Between 2014 and 2016 the Maldives’ economy grew by more than 4%. Within the same year the small island nation experienced less than 1% inflation – far exceeding the current Administration’s goal to manage inflation below 2%. State income was recorded at 1.17 billion US Dollars – at the current rate of exchange 1 US Dollar is valued at 15.47 Rufiyaa – with expenditure at 1.43 billion.
The population hovers at 400,000.
The per capita income: 8,063 US Dollars.
In order to invest in development and infrastructure projects; the Government had borrowed the equivalent of 310 million Dollars.
Major investments in 2016, excluding those in tourism, totalled 56 – this will contribute significantly and immediately towards driving economic diversification while further bring in, within the next five years, a proposed total of 1.48 billion Dollars in initial investments.
The country has undertaken major investments towards improving airport and seaport facilities. An estimated 900 million Dollars have been spent within the past three years, for the development of Velana International Airport – the gateway to the Maldives and one of the biggest drivers of Tourism. The Malé Port has seen a 9.08 million Dollar upgrade of vehicles and equipment – helping reduce clearing time. Storage capacity at the Malé Port is being increased, with clearing of goods relocated to Hulhumalé and other expansions in the works – work has also commenced on a Cold storage Facility for better management of perishable goods.
The Administration has taken unprecedented steps towards facilitating improved credit guarantees by increasing caps from 50 million Rufiyaa to 100 million (from 3.24 million Dollars to 6.48 million) and, for the first time ever, Business Development loans are being considered without pre-requirements for mortgages.
A whopping, estimated, 64,000 jobs have been created within the past three years across the country – through the Administration’s many socio-economic programmes, urban development projects and productivity drives. The Administration is well on its way to achieving its pledge of creating 94,000 jobs by the end of its five year term.
The Tourism and Hospitality industry has seen 20 resorts and one tourist hotel begin full operations in the last three years with guesthouse registrations growing almost exponentially every year.
Critics notwithstanding, the Maldives’ push for bold economic growth has been relentless.
Taking a beat to contrast and compare; the changing economic landscape has forced emerging economies to seek a new model in order to prosper in the new environment. It’s well known that there has been a significant tilting of ‘economic power’ towards the east which constitutes upwards of 82% of the world’s population.
At the same time we are also witnessing the emerging economies of the Middle East embarked upon the 4T economic model which focuses on prioritised development of Tourism, Trade, Transport and Technology; a model that the Maldives has also recently adopted.
However, will the Maldives maintaining the 4T model bring vigorous competition to its economic shores?
This is the “golden egg” of the Maldivian economy.
The economy, in the early 70’s, boomed with the inception of the tourism industry. While the rest is history however; in recent years there has been a renewed and passionate emphasis on developing tourism. In 2016 alone a remarkable 11 resort islands were developed with the number of guest houses increasing by more than 200.
This expansion has led to increased employment.
To encourage development in tourism the Government waived more than 350 million Rufiyaa of dutiable goods; imported to build new resorts.
Trade is an essential component in driving the economy. The Government of the Maldives has embarked on developing free trade zones in order to spark more investments.
The nation is also pushing to drive capacity in local fish canning by adding storage capacity; to keep the catch fresh, and by increasing the number of canneries throughout the country.
With more than 90% of the staple foods and other necessities imported, the country’s manufacturing remains at a very embryonic stage and there remains a heavy reliance on imports for public consumption as well as for tourism. The expansion of the number of resort hotels presents an immense opportunity, for investment in manufacturing, to fulfil the potentially lucrative supply requirements for hotels and thus adding and developing a whole new aspect to the Maldivian economy.
The country’s economy, ever dependent on tourism, is also on the ambitious path towards developing its airports. While the main international airport, Velana International Airport, is poised to expand capacity to 7 million visitors a year, Gan International Airport, in the far south, has also developed as an international facility and is already operational with international carriers operating to and from the destination.
Currently the Maldives has nine domestic airports – in H Dh. Hanimaadhoo, R. Ifuru, B. Dharavandhoo, A Dh. Maamigili, T. Thimarafushi, L. Kaddhooo, G Dh. Kaadeddhoo, GA. Koodddoo, N. Fuvammulah – with development of Dh. Kudahuvadhoo ongoing and expected to begin before end of April 2017.
President Abdulla Yameen Abdul Gayoom, in his 2017 Presidential Address said, “During the year , work will commence on regional airports in H Dh. Kulhudhuffushi, Sh. Funadhoo, F. Nilandhoo, G Dh. Maavarulu and G Dh. Fares’maathodaa” highlighting his Administration’s steadfast commitment towards establishing easy air transportation throughout the Maldives.
This rapid regional development is expected to drive a surge in inter-island ferry services – to transport goods as well as budget travellers en route to guest houses.
And with well over 40 active seaplanes in operation, one of the tiniest countries in the world boasts the largest, and busiest, seaplane fleet in the world.
The millennial population of Maldives stands at 149,000; close to half the population. The youth are extremely tech savvy and the government encourages web services and cashless transactions.
Last November was witness to the Invest Maldives forum held in Delhi where software developers showcased applications for guesthouses assisting with bookings and managing their businesses; enthusiastically tying into the growing guesthouse market needs.
The nation has also sought to reinvigorate the health sector by making significant investments and upgrades; the main hospital in the capital Malé, Indira Gandhi Memorial Hospital (IGMH), in 2016 established and commenced services of a National Cardiac Centre, a National Uro-Renal & Fertility Centre and Digital x-ray facilities while also, in 2017, launching a Breast Clinic with Cancer Screening and Mammography facilities.
Mobile apps, and app enable services, are quickly becoming a mainstay of swift economic diversification – easily pushing everything from food delivery to banking and almost everything in-between. Maldivian tech talent have seen significant successes abroad – from Shafiu Hussain, who saw his app TaxiMonger heavily disrupt the taxi-booking ecosystem in Malaysia, to Mauroof Ahmed, a User Experience Designer at Linkedin based in the San Francisco Bay Area, and many others.
With the introduction of the Tax system, firms are now providing online accounts managing services; assisting with annual company accounts as well as tax management.
Businesses are now increasingly powered by up-to-the-second technology.
Following on the heels of its previous successes the current Administration, in 2017, hopes to spur upwards of a 4.7% increase in economic growth. State spending is projected at an estimated 1.45 billion Dollars with income estimated at 1.42 billion.
It is also estimated that the deficit at 2017 will be reduced to 19.65 million Dollars with a primary balance profit of 71.34 million Dollars. The projected budget deficit for 2017 is estimated as less than 1% – at 0.5% of GDP – and the Administration is confident inflation will remain below 2%.
The country will continue to seek overseas assistance to fund its bold development initiatives such as the i-haven project. A detailed development plan of the project, to be commenced in the north, will be completed by April 2017 and will drive the Administration’s Special Economic Zones initiative.
It is estimated that 2017 will be rich in job opportunities – with continued resort development as well as other ongoing projects – well on its way to achieving the Administration’s 94,000 jobs target.
Recognising that a nurturing climate for investment is vital for economic growth, the Administration has committed to work towards establishing dispute resolution mechanisms such a Commercial Court and an internationally recognised Arbitration Centre.
In terms of future Tourism growth; 2017 will see the launch of 25 resorts developed across 13 atolls and a tourist hotel developed at GA. Kooddoo – increasing bed capacity in the industry by 5,275; driving the vision of catering to upwards of 7 million visitors every year.
The Maldives remains on track towards an economic renaissance – not unlike, but far exceeding, the growth seen during the 1970s tourism boom – and the nation is poised to reap its many rewards.
Editor's Note: Ahmed Zuhoor is Minister at the President’s Office and Chair of the Economic and Youth Council Maldives under President Abdulla Yameen Abdul Gayoom's Administration.